Recently I wrote a blog post exploring how immigrant families are not receiving due process under Trump’s “Zero Tolerance” policy. In writing that post, I cited an investigative piece of reporting from in which it was noted that Southwest Key, a Texas based non-profit that houses the children of immigrants detained at our southern border will be paid $458 million by the federal government in fiscal 2018 to care for what company executives have reported now stands at approximately 5,000 immigrant children on any given day.

With the $458 million that the federal government will pay Southwest Key in 2018, and the 5,000 children currently in its care, that works out to $250.95 that Southwest Key is being paid per child, per day. That amount is out of line with what trained and vetted foster parents are paid in Texas on a per day basis to care for children ($47.37 per child, daily) or even what Texas’s Department of Family and Protective Services-funded residential shelters in Texas are paid to care for children ($103.03 per child, daily). It’s even out of line with what Texas currently spends to house and care for the state’s prisoners ($58.60 per prisoner, per day).

This higher cost that Southwest Key is charging to care for immigrant children comes despite the fact that trained foster parents and well established, state run shelters for children almost certainly offer a level of care higher than that offered by many of Southwest Key’s current, hastily constructed and quickly-staffed children’s shelters, which include sites such a large, converted Wal Mart building currently housing approximately 1,500 immigrant minors.

It can be argued that with the recent, large influx of immigrant children entering residential care with Southwest Key facilities, these facilities qualify as emergency shelters due to the organization’s need to quickly ramp up and hire staff to care for all of these newly placed children. However, according to the Texas Department of Family and Protective Services (DFPS), 24 hour residential emergency care for children in DFPS facilities is billed at only $129.53 per child, daily, far below what Southwest Key is currently charging the federal government to provide what could be characterized as 24 hour emergency care and shelter for children.

Juan Sanchez Southwest Key

Juan Sanchez, Southwest Key CEO
photo credit: Austin American-Statesman

The amount that Southwest Key is charging the federal government to care for immigrant children is clearly out of line with what different types of 24 hour residential care for children is generally paid on a per child, per day basis in Texas.

The $458 million that we are paying Southwest Key in fiscal 2018 marks the last year of a current three year contract that the company currently has with the federal government  – a contract worth a reported total of $995 million. However, as a registered non-profit, Southwest Key doesn’t simply rely on the money that the feds are paying the company. Instead, Southwest Key also solicits funds from donors who are likely good-hearted individuals, foundations, and and organizations who believe that this charity serving the needs of immigrant children can certainly use donated income to meet the needs of these poor kids. 2015 was the latest tax filing year for which I could find an IRS statement for Southwest Key, but in that year alone, the company reported taking in $495,071 in charitable donations. Do you think that these donors were aware of how much the company is already paid by the federal government? Do you think donors to Southwest Key are aware that the company’s CEO, Juan Sanchez, currently makes approximately $1.5 million annually? In addition to Mr. Sanchez’s current salary package of $1.5 million, at least 5 other executives at the non-profit were reported in 2017 to be drawing salaries of more than $100,000.

Mr. Sanchez has repeatedly justified his exorbitant salary package, recently telling the Austin American-Statesman that, “We bring in $450 million, and I have 7,000 employees to manage … and we’re in eight states in the country, and we have been doing this for 30 years. I think the salary’s justifiable.”

However, in 2017, Southwest Key actually laid off nearly 1,000 employees, with Sanchez saying at the time that the Trump administration could be the cause of the layoffs, and stating, “There’s been this determination by the government that we’re going to cut the number of kids that you’re serving by 48%’, so as the government has made these cuts across the country, what do we do?  …They told us you need to terminate folks so we are in the process right now of needing to terminate people.”

These layoffs came in a year that Southwest Key saw annual funding from the federal government jump by millions of dollars.

In addition to operating shelters to care for immigrant children, Southwest Key also operates operates a public charter school called East Austin College Prep, as well as what the organization describes as “youth justice and wellness programs.”  This charter school receives its own pot of public money in addition to the $458 million being paid to the company for residential care of immigrant children.

According to 2015-2016 financials released by East Austin College Prep, the Texas charter school run by Southwest Key, the school appears to have received $6,350,922 in state aid, plus an additional $1,865,000 in federal aid, coming to a total of $8,215,922 in public funding for the year.

I was unable to find any specific information or financial records for the ‘youth justice and wellness programs” that Southwest Key says that it’s operating.

The Southwest Key website is mostly down at the moment, but enough of it remains online to see certain info there. In answer to the question of how Southwest Key is funded, the website’s answer is, “Our budget is drawn primarily from government contracts for youth programs, with additional support from foundations, corporations, special events and private contributions. We are taking innovative steps to become self-sufficient by operating a growing portfolio of social enterprises — businesses which serve a double bottom line: to create good jobs for low income residents while bringing in funds to support our nonprofit mission.”

Well, if the company plans to become self-sufficient, meaning it will no longer rely on funding such as three year contracts with the government worth $995 million combined with annual charitable donations in the range of $495,071, it’s going to have to create one hell of a number of “good jobs for low income residents.” I wonder how many of these “innovative” jobs for low income residents it will take to cover Juan Sanchez’s salary? Seriously, when you’re talking about an organization receiving almost half a billion dollars from the federal government this year alone, and which receives annual charitable donations in the hundreds of thousands of dollars, with a CEO making $1.5 million annually, it’s beyond laughable for that organization to claim that it seeks to become “self sufficient” by creating jobs for low income residents (residents of where, exactly?).

I’m just a blogger in Tennessee who cares, like so many other Americans do, about what is happening to immigrant children along our southwest border. However, I’m also a taxpayer, and I seriously question how an organization claiming to be a charity concerned only with serving the needs of children should be paid this much money relative to the services it’s providing.

NOTE: I have contacted the Jeff Eller Group, which handles media relations for Southwest Key in order to get any feedback they have to this blog post. I will immediately publish any response I receive from the Eller Group as an addendum to this blog post as soon as I receive it.

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